1. The Bomb’s Been Dropped: What Now? A Subgame Perfect Nash Equilibrium Analysis of US-Japanese Negotiations after the Nagasaki Bomb

2. Main Goals Did Japan and America act rationally during the negotiations over Japan’s surrender? If not, how do we explain the discrepancies? What lessons from this negotiation can we apply to international relations?

3. Background Two Players: American and Japanese government Japan was all but defeated; Nagasaki Bomb finally led to Japanese acceptance of Potsdam Declaration Japan would surrender, but only if Emperor remained as head of the government.

4. Setup of Game- Perfect Rationality and Knowledge US initial strategy: Accept, Partially Accept, Reject Japan’s response: Accept Response or Ask for More Demands US response: Accept More Demands or Reject/Bomb Japan’s response: Accept or Fight

5. US Payoffs Soldier Deaths- No invasion! Domestic Reaction- Mostly against Japanese Emperor Russian Influence- US afraid that continued war would push Japan into Russian corner General International Influence- US wants to gain superpower status and influence while avoiding third world war.

6. Japan Payoffs Citizen Deaths - Increase with Bombings Political Disagreement- Cabinet of 6 requires unanimous vote Cultural Respect- Japanese highly value the status of the Emperor Pride and Nationalism- More honorable to fight to the end instead of surrendering

7. Extensive Form

8. Results Using Backward Induction, we find that America should have fully accepted Japan’s conditional surrender and Japan should have accepted America’s response.

9. Actual History America sent a partial acceptance Japan, instead of asking for more demands, accepted Why this discrepancy?

10. Behavioral Economics Framing Effect Overconfidence Bias Backward Induction takes time and thought for proper analysis

11. International Relations Influence of Domestic Factors Deterrence Theory –Psychological Fears –Too much noise –Unaccounted factors, like Emperor and the intensity of Japanese loyalty

12. What Can We Learn? Obvious weaknesses of perfect rationality model From that weakness, we learn ways to overcome obstacle –Improve communication amongst nations –Institutions –Revisiting history is easy, predicting is not –Use Case studies and its variables to enhance overall theory creation.